The GBP/USD pair resumed its recent bearish momentum in the Asian session, after a temporary reversal seen yesterday, as investors remain nervous ahead of a slew of key macro news from both the UK and US.
GBP/USD: Thursday’s reversal – a dead cat bounce?
The spot stalled its more-than 1 big figure recovery from two-week troughs of 1.3344 and fell back into the red zone on Friday, now accelerating the downside amid renewed North Korea news-induced risk-aversion and resurgent USD demand across the board.
The US dollar regained lost ground amid higher Treasury yields, as the bulls cheer the latest upbeat remarks from the US President Trump on the US growth outlook. The USD index now rises +0.13% to 93.09, extending the recovery from 92.92 levels.
Moreover, mixed sentiment on the Asian equities amid negative oil prices and International Atomic Energy Agency’s (IAEA) warning over the North Korean nuke threat, undermined the sentiment around the higher-yielding pound.
On Thursday, the GBP/USD pair staged a solid comeback from below 1.34 handle, as the US dollar came under fresh selling pressure across its main competitors. Markets remain wary over the impact of the tax reforms proposed by the US President Trump, while month-end/quarter-end flows also weighed down on the buck.
Attention now turns towards the UK current account and final GDP data due on the cards later today, while the US core PCE price index, personal spending and consumer sentiment data will offer fresh trading impetus in the NA session. Also of relevance for the major, will be the speeches by the BOE Governor Carney and FOMC member Harker. be
GBP/USD levels to consider
According to Valeria Bednarik, Chief Analyst at FXStreet, “the pair's intraday recovery has pared right below the 38.2% retracement of the mentioned rally, now the immediate resistance at 1.3460, with a modest positive tone in the 4 hours chart, as the price settled a few pips above its 20 SMA, whilst technical indicators reached extended their recoveries up to their mid-lines, still not enough to confirm a bullish extension. An upward acceleration above 1.3460, however, could see the pair extending its recovery this Friday, moreover if UK data come in above expected.”
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